While the cautious optimism that existed after the first quarter
remains, we have not yet seen any clear trend in the form of a general
upswing in demand. The business climate improved somewhat during the
second quarter compared with the preceding quarter and corresponding
quarter a year ago, but is still characterised by great uncertainty. In
addition, order intake for the Group’s companies continues to show
considerable variation between months, segments and geographies.

Acquisitions are central to the Indutrade Group’s development, and the
pace of acquisition increased during the quarter through four completed
acquisitions and a total of six since the start of the year. Combined
annual sales for the units acquired thus far during the year amount to
approximately SEK 350 million.

We see that Indutrade’s business model and our company culture fit well
in the UK and Ireland, and have therefore consciously increased our
acquisition activity there. During the first part of the year we
completed four acquisitions in this region. Our goal is to continue
growing in these countries, both through additional acquisitions as well
as organically, and we consider it realistic to reach sales of minimum
SEK 1 billion within a few years.

Second quarter

Order intake during the quarter exceeded net sales by 2% and was 7%
higher than in the corresponding period in 2013. All of the business
areas reported order intake in excess of net sales during the quarter,
and three of the five business areas had higher order intake for
comparable units than the corresponding period a year ago.

In the Nordic countries, development was slightly positive in Sweden and
essentially unchanged in Norway and Denmark, while demand in Finland was
at a continued low level. Outside the Nordic countries, development was
positive particularly in the UK and Ireland, and to some degree in
Germany and Benelux.

Net sales during the past quarter grew 7%. For comparable units the
change was marginal.

Engineering & Equipment, with operations primarily in Finland, continues
to be negatively affected by the low level of domestic industrial
activity, and order intake decreased by 8% during the quarter.

Flow Technology noted higher order intake also during the second
quarter, which was distributed across most segments in the business
area. Earnings for the quarter were hurt by somewhat lower gross margins
combined with a slight rise in the business area’s overheads.

Fluids & Mechanical Solutions experienced positive development during
the quarter for most of the business unit’s operations, except for the
filters segment, which noted a slight decline. Higher net sales combined
with continued good cost control resulted in improved profitability for
the quarter.

Industrial Components continues to perform very strongly. Order intake
grew 16% during the quarter, and growth was both organic and
acquisition-driven. Most companies showed growth, particularly in the
med-tech, mechanical components and industrial chemical products
segments. Earnings improved by 30%, with a good EBITA margin.

Special Products’ total order intake rose 7% despite negative organic
growth, owing to a decrease in project-based orders in Switzerland
during the quarter. It is gratifying to note that order intake for the
energy segment recovered following a couple of weak quarters. Most other
businesses noted a slight improvement in order intake at the same time
that recently acquired units continued to develop according to plan. The
earnings increase during the quarter came mostly from completed
acquisitions. This was counteracted by a poorer mix, i.e., sales with
high margins have been replaced by volumes from businesses with lower
margins, resulting in a lower EBITA margin for the quarter.

Margins

The Group’s gross margin remains stable at 34% (34%). The EBITA margin
was 11.6% for the quarter (11.6%), which is higher than the Group’s
target of a minimum 10% EBITA margin over a business cycle.

Acquisitions

Four acquisitions were carried out in the UK during the quarter: CRP
Ltd, which specialises in corrosion-resistant piping, valves and
expansion bellows; Micro Spring and Presswork Ltd, which manufactures
industrial springs and stampings; Birmingham Specialities Ltd, a
specialist manufacturer of industrial components; and ALH Systems Ltd, a
specialist in encapsulants, sealants and adhesives.

Outlook

The trend we have seen during the first half of the year will likely
continue during the coming autumn, i.e., some growth in a number of
segments and in certain geographical areas. Our ambition is, according
to Indutrade’s business model, to continue acquiring companies during
the autumn.

Johnny Alvarsson, President and CEO

About Indutrade

Indutrade markets and sells components, systems and services with a
high-tech content within selected niches. Indutrade's business is
distinguished by

- high-tech products for recurring needs

- growth through a structured and tried-and tested acquisition strategy

- a decentralised organisation characterised by an entrepreneurial
spirit.

The Group is organised into five business areas: Engineering &
Equipment, Flow Technology, Fluids & Mechanical Solutions, Industrial
Components and Special Products. Indutrade's sales totalled SEK 8,831
million in 2013, generating operating income of SEK 990 million before
depreciation of intangible assets. Indutrade is listed on the Nasdaq OMX
Stockholm.